Tariff classification and provisional tax collection principles controlled duty liability, with interim exemption not defeating the enacted rate.

Reel cores were treated as falling within Tariff Heading 4822.00, so the stated duty rate applied for the relevant period despite a later exemption notification. The demand was also treated as timely because the returns were due on prescribed monthly dates and the demand was raised within the permissible limitation period. On provisional collection of taxes, the declared tariff rate introduced through the Finance Bill was treated as operative on introduction and as continuing into the enacted Finance Act, so an intervening exemption notification did not displace the duty liability and Section 5 relief was unavailable.

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Issues: (i) Whether reel cores were classifiable under Tariff Heading 4822.00 and liable to duty at 12 per cent. (ii) Whether the demand was barred by limitation. (iii) Whether the benefit of Section 5 of the Provisional Collection of Taxes Act, 1931 was available despite the interim exemption notification.

Issue (i): Whether reel cores were classifiable under Tariff Heading 4822.00 and liable to duty at 12 per cent.

Analysis: The tariff description brought the goods within Heading 4822.00 and the later exemption notification did not alter the classification applicable to the disputed period.

Conclusion: The goods were correctly classified under Heading 4822.00 and were liable to duty at 12 per cent, against the assessee.

Issue (ii): Whether the demand was barred by limitation.

Analysis: The returns were required to be filed on the prescribed dates for the relevant month, and the demand was raised within the permissible period on that basis.

Conclusion: The demand was not barred by limitation, against the assessee.

Issue (iii): Whether the benefit of Section 5 of the Provisional Collection of Taxes Act, 1931 was available despite the interim exemption notification.

Analysis: A declared provision becomes operative on introduction of the Bill and merges into the enacted provision when the Bill becomes law. Where the final Act retains the proposed tariff rate, an intervening exemption notification does not displace the duty liability, and the refund mechanism in Section 5 does not assist the assessee.

Conclusion: The benefit of Section 5 of the Provisional Collection of Taxes Act, 1931 was not available to the assessee, against the assessee.

Final Conclusion: The duty demand was sustained on classification and limitation, and the appeal failed.

Ratio Decidendi: Where a tariff entry proposed in a Finance Bill is retained in the enacted Finance Act, an intervening exemption notification does not defeat the liability flowing from the declared provision, and Section 5 of the Provisional Collection of Taxes Act, 1931 does not grant relief in such a case.

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